New Delhi: IndusInd Bank’s promoters are seeing the recent dip in its stock price as an opportunity rather than a crisis. Ashok Hinduja, Chairman of IndusInd International Holdings Ltd (IIHL), believes this is a great time for promoters, and even regular investors, to buy more shares, and despite some concerns, the bank has made it clear, it doesn’t need any extra capital from its promoters.
What’s really happening?
- No Extra Capital Needed: IndusInd Bank is financially strong, with a capital adequacy ratio of over 15%. That means it’s in good shape and doesn’t need an emergency cash injection from its promoters.
- Good Time to Buy? Hinduja sees the recent drop in stock price as an overreaction, calling it a “panic situation.” He thinks the bank’s book value and overall strength make it a great time to increase their stake.
- Derivatives Portfolio Issue: The bank recently disclosed some inconsistencies in its derivatives portfolio, which could impact around 2.35% of its net worth, roughly ₹2,100 crore, this news triggered the recent stock price slide.
- Audit in Progress: PwC is conducting an external audit to investigate the issue, and the report is expected by the end of March 2024. It should clarify what went wrong and who’s responsible.
- Leadership Questions: There are some leadership changes happening too. CFO Govind Jain recently resigned, and RBI only gave CEO Sumant Kathpalia a one-year extension. However, Hinduja didn’t comment on these moves.
What’s in the bottom line?
Yes, IndusInd Bank is dealing with an accounting issue, but its promoters remain confident. They see this as a short-term bump rather than a long-term problem, while investors wait for the audit report, the promoters seem eager to buy more, believing the stock is undervalued.
